The management team at the chipmaker has indicated that this year could mark a significant shift for the company.
One stock that’s particularly fascinating in the artificial intelligence (AI) sector is AMD. Compared to its main competitor, Nvidia, its technology hasn’t quite reached the same level of performance. Still, AMD has made strides, and its AI accelerators might start being seen as legitimate options against the leading products, especially if Nvidia’s prices become too steep.
A clearer picture of AMD’s future will emerge when it reports its fourth quarter earnings on February 3rd, along with its outlook for 2026. They’ve already shared impressive growth expectations for the next five years. However, if the company seems on track to meet those projections, it could lead to a surge in stock prices.
AMD’s recent performance was not impressive
When discussing AMD, it’s hard not to mention Nvidia. AMD is taking a somewhat diversified path in its chip development, with revenues being split almost equally between its data center and non-data center divisions. Although revenue diversification can be beneficial, especially during a substantial boom in computing infrastructure, AMD may be missing out on this opportunity. Nvidia, for instance, generates around 90% of its revenue from data centers.
Data center investments are expected to rise significantly until at least 2030, and AMD shares this belief, forecasting a remarkable 60% annual growth rate in the data center sector through that year. Yet, they have a long road ahead to make that prediction come true.
Today’s changes
0.99% $2.50
Current price
$254.53
Key data points
Market capitalization
$410 billion
Daily range
$253.08 – $257.42
52 week range
$76.48 – $267.08
Volume
290K
Average volume
40M
Gross profit
44.33%
In the third quarter, AMD’s data center revenue grew 22% year-over-year, which is still below what they project for the next five years.
Looking ahead
Given this context, we anticipate strong remarks from leadership about the future outlook for 2026 and the potential rebound in the data center sector. If the management gives optimistic guidance, the stock price is likely to rise. Conversely, if they seem unsure about the 2026 forecast, the market might begin to scrutinize AMD more critically.
The current valuation of AMD stock is at a premium, sitting at 40 times expected earnings for 2026. This is quite high compared to other AI-focused companies and is also above Nvidia’s 24 times expected earnings for its 2027 fiscal year.
AMD must substantiate this premium with substantial growth and earnings expansion. So far, those results have not materialized recently, but management is convinced that a turnaround is near. We’ll soon find out on February 3rd whether those thoughts bear out. If they do, we might see a sharp increase in stock prices.
